Hanbaek Lee


I am a PhD candidate in Economics at the University of Pennsylvania.

My research focuses on Macroeconomics and Finance, with a particular focus on the aggregate implications of micro-level heterogeneity.

I am on the 2020/2021 Job Market and will be available for interviews.

Contact: hanbaek [at] sas.upenn.edu


Job Market Paper

Striking While the Iron Is Cold: Fragility after a Surge of Lumpy Investments

In this paper I argue that synchronized large-scale investments of large firms can significantly amplify productivity-driven aggregate fluctuations, and lead to investment cycles even in the absence of aggregate shocks. Using U.S. Compustat data, I show that years preceding recessions display investment surges among large firms. Furthermore, after the investment surges, large firms become inelastic to interest rates and display persistent inaction duration. I then develop a heterogeneous-firm real business cycle model in which a firm needs to process multiple investment stages for large investments and can accelerate it at a cost. In the model, following a TFP shock the synchronized timings of lumpy investments are persistently synchronized. And TFP-induced recessions are especially severe after the surge of large firms’ lumpy investments. In support of this prediction, I present evidence for the investment cycle in post-shock period in macro-level data on nonresidential fixed investment.

2021: SED; 2020: KER International Conference, WEAI, MEA (Cancelled); 2019: FRB San Francisco (Thomas J. Sargent Dissertation Fellowship)

Working papers

Top Income Inequality and the Business Cycle (Draft coming soon)

This paper studies how the pass-through businesses of top income earners affect aggregate fluctuations in the U.S. economy. I develop a heterogeneous-household real business cycle model with endogenous labor supply and occupation choice. In the model, heterogeneous labor demand sensitivities to TFP shocks between pass-through businesses and C corporations build the core of the aggregate dynamics. Using the model, I argue that the recent trend of top income inequality being driven by pass- through businesses has substantially changed the business cycle. In particular, unemployment responds significantly more strongly to a negative TFP shock under top income inequality driven by pass-through businesses than under top income inequality driven by factor income.

Presentation: 2021 AEA/ASSA

Aggregate Uncertainty and Repeated Transition Method

In this paper I develop and test a novel algorithm that solves heterogeneous agent models with aggregate uncertainty. The algorithm iteratively updates agents’ expectation on the future path of aggregate states from the transition dynamics on a single path of simulated shocks until the expected path converges to the simulated path. The non-linear dynamic stochastic general equilibrium could be computed with a high degree of accuracy by this method; the market clearing prices and the expected aggregate states are directly computed at each point on the path without relying on the parametric law of motions. Using the algorithm, I analyze a heterogeneous-firm business cycle model where firms are subject to external financing cost and hoard cash as a buffer stock up to a target level. Based on the model, I discuss the business cycle implications of the corporate cash holdings.

Work in progress

Rising Concentrated Intangibles (with Jesús Fernández-Villaverde)

Rising Intangibles and Fading Listed (with Sara Casella and Sergio Villalvazo) [slides]